NEW YORK — Three major cigarette dealers who have long defied state authorities by selling millions of untaxed packs from a Long Island Indian reservation are ignoring a court order that was supposed to have shut them down, a federal judge ruled Friday. Since September, several smoke shops on the Poospatuck Reservation have been barred from selling untaxed cigarettes to...
NEW YORK — Three major cigarette dealers who have long defied state authorities by selling millions of untaxed packs from a Long Island Indian reservation are ignoring a court order that was supposed to have shut them down, a federal judge ruled Friday.
Since September, several smoke shops on the Poospatuck Reservation have been barred from selling untaxed cigarettes to the general public after they were successfully sued by New York City.
But on Friday, U.S. District Judge Carol Amon ruled that at least three of the men behind those shops have secretly continued to sell tens of thousands of packs through front companies or relatives.
She found the dealers in contempt, saying the city’s legal team had presented compelling evidence that they were still doing business, including bank records and recorded phone calls. They could face heavy fines.
Lawyers for the trio, Rodney Morrison, Wayne Harris and Jesse Watkins, didn’t immediately respond to phone and e-mail messages. The contempt citation is civil, but two of the three also have criminal legal troubles.
Morrison, proprietor of a shop that once supplied millions of cartons of cigarettes to black market dealers from New York City, has been imprisoned since 2004. He was acquitted of a murder charge, and a racketeering conviction was tossed out because of confusion over the legality of Indian reservation cigarette sales, but he is now serving a 10-year prison term in a gun case.
Amon said he has continued to run his business from prison with the help of a partner, Wayne Harris, who had also been banned by the judge from selling cigarettes. Another smoke shop owner, Jesse Watkins, was indicted on federal charges in May after being caught in an FBI sting. Prosecutors said he purchased truckloads of cigarettes he believed had been stolen from a military base.
An Associated Press investigation last year found that four of the largest cigarette sellers on the Poospatuck reservation, including Watkins and Morrison, were former cocaine dealers who had come to control 15 percent of the state’s cigarette market by selling packs tax free. That market share has now dwindled due to a series of legal assaults on their businesses.
New York’s Indian tribes say treaty rights exempt them from state cigarette taxes, and state authorities have hesitated to enforce collections for decades out of deference to their sovereignty claims. Gov. David Paterson, however, has announced plans to impose a tax on reservation sales later this year.